What Is KYC and Why Is It Important? How Is It Part of AML?


Know Your Customer (KYC) and Anti-Money Laundering (AML) rules are fundamentally designed to prevent or minimize the effects of money laundering, terrorism funding, corruption, and other types of financial crime.
KYC and AML are required for regulated companies that are regarded to be at high risk of enabling financial crime. While KYC and AML are often linked with financial institutions (FIs), the requirements can apply to anything from a casino to an art gallery. Several nations do not yet have AML legislation, and other jurisdictions' regulations are significantly stricter than others – therefore always refer to your country's unique laws (such as AML6 in the EU and the Bank Secrecy Act in the US).

KYC is the procedure through which firms authenticate the identity of their customers, and it is part of the larger AML framework. One important issue for businesses is the ability to swiftly and effectively verify the identification of a new customer via a remote web channel while maintaining a favorable customer experience.

Our technology assists firms in remaining KYC and AML compliant by providing secure web identity verification and authentication, which is the first line of defense against online criminal behavior. The first and most important stage in KYC/AML initiatives is to confirm who your customers are.

What is Know Your Customer?

KYC is a financial regulatory obligation mandated by various rules based on the region where the certification is obtained when you take a kyc analyst course in India. KYC is a requirement that regulated organizations gather personal information about their customers to guarantee that their services are not abused and that anyone applying for financial services is not on sanctions or PEP lists. These KYC procedures are performed at account opening and regularly thereafter, or if a customer's information changes. Personal information obtained varies globally depending on rules, the risk appetite of the firm, and the product.

Today, it is critical to validate a person's claimed identification over an online/remote channel. With us, you can validate a customer's asserted identity in a way that provides the highest level of security while remaining simple and inclusive. Real Presence Assurance employs biometric face verification because it is the most secure, convenient, and comprehensive technique for remotely supporting KYC compliance.

What is Anti-Money Laundering (AML)?

AML is a set of rules and procedures designed to prevent and detect financial crime, which can range from terrorism financing to money laundering. Most institutions will begin AML with kyc analyst course in India knowing your clients and then monitor financial transactions and report questionable behavior.

As a result, AML can refer to a wide range of measures used to meet severe criteria and avoid liabilities.

Is there a distinction between KYC and AML?

In short, KYC and AML should not be pitted against one another. This is because AML is a catch-all phrase for a variety of processes and laws, including KYC. KYC is one of the numerous techniques that can help organizations comply with the broader AML framework.

KYC refers exclusively to identity verification and risk assessment, whereas AML could apply to a much broader variety of measures to monitor risk before and after KYC checks (such as transaction monitoring, improved due diligence, sanctions & PEP screening, and more).
Finally, KYC is a component of AML.

Which do you need: KYC or AML? 

KYC and AML requirements vary by jurisdiction, although the vast majority are mandatory. KYC and AML compliance, for example, has been mandatory for US banks since 2001, when the US Patriot Act was adopted.

Due to the overlap, it would be impossible to meet AML regulations without first implementing effective KYC measures.

Finally, money laundering is on the rise, and financial institutions must work hard to keep up. That is why systems like ours, which can safely verify a remote customer's identification in jurisdictions that enable remote automatic onboarding, have become critical.

What are the benefits of AML KYC Compliance Certification?

The accreditation is intended to improve the quality of compliance with RBI directives in countering illegal operations and the flow of cash through banking channels. KYC and anti-money laundering activities have grown in importance as a result of the security risk they pose to the country, as well as to maintain the financial health of the institutions.

What advantages will I gain from obtaining AML - KYC certification?

A rising number of working professionals in the banking and finance fields are obtaining KYC and anti-money laundering certifications. Students who want to work in the banking and finance industry will find this qualification valuable through a banking course.

KYC/AML best practices in banking, crypto, and fintech

Money laundering and fraud are particularly prevalent in the banking, fintech, and cryptocurrency industries. Good kyc analyst course in India or AML practices can help to prevent this by doing the following:

Reduced legal and reputational risks: Businesses that follow AML requirements might avoid large fines and other penalties from regulators while also protecting their reputation.

Identifying fraudsters: Fraudsters in financial services not only utilize phony Identities but also a variety of complex tactics, such as money mulling. Businesses can prevent even the most inventive fraud efforts by guaranteeing that only verified individuals may become clients.

Enhancing the user experience: Users are not required to pass additional checks when firms improve their KYC/AML flows based on applicant risk profiles. Drop-offs are reduced, and the user experience is enhanced.